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TMI Blog2016 (10) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... sing therefrom formed part of the impugned capital gains arising in this year. We, thus, find no reason to impugne the declared intention of the assessee that the share were acquired as capital asset. In the aforesaid view of the matter, we find considerable merit in the arguments raised on behalf of the assessee. Hence, in our view, the assessee is entitled to treat the gains arising on purchase and sale of shares in the impugned assessment year as short term capital gains as claimed. Accordingly, the action of the Revenue on the issue requires to be reversed. - Decided in favour of assessee. - ITA No.2136/PN/2014 - - - Dated:- 17-8-2016 - SHRI VIKAS AWASTHY, JM AND SHRI PRADIP KUMAR KEDIA, AM For The Appellant : Shri R. G. Nahar For The Respondent : Shri Hitendra Ninawe ORDER PER PRADIP KUMAR KEDIA, AM : The captioned appeal filed by the assessee is against the order of CIT(A)-I, Pune dated 31.07.2014 relating to assessment year 2008-09 passed under section 143(3) of the Income-tax Act, 1961 (in short the Act ). 2. In this appeal, the assessee has raised the following Grounds of Appeal :- 1. On facts and circumstances prevailing in the case a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving regard to the objects and the motive behind making such investments. In earlier years also, the assessee was holding shares and the same were reflected in the Balance Sheet under the head investments . As on 31st March 2007, the total shares held in stock were amounting to ₹ 9,59,397/- i.e. in four scrips only. The Ld. AR emphasized that shares were taken by way of physical delivery and duly credited to the demat account of the assessee and held for reasonable/substantial period of time before those were disposed off. Similarly, when the shares were sold, the actual delivery thereof was given. He pointed out that the assessee has not incurred any expenditure on stock which is ordinarily required in a systematic or organized course of activity. The investment made in the various shares is limited to just 16 scrips amounting to ₹ 3,11,831/- as on 31st March, 2008. He next pointed out that Security Transactions Tax (STT) has been paid on the sale/purchase of shares as required by the provisions of the Act to avail the benefit of section 111A and 112 of the Act. He went on the observe that in earlier assessments also, the gain arising on sale of shares have been offer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion as per section 2(13) of the Act. He, therefore, pleaded that no interference with the order of the CIT(A) is called for. 8. We have carefully considered the rival submissions and orders of the authorities below. The assessee has declared gain arising on purchase and sale of shares to the tune of ₹ 13,59,669/- as short term capital gain assessable under the head capital gains. As per the scheme of the Act, the assessee is entitled to beneficial treatment in taxation on short term capital gains and long term capital gains on sale of shares and securities listed on a recognize stock exchange. Accordingly, the assessee has sought to avail the concessional tax treatment in respect of capital gains offered that arose to him. The Revenue, on the other hand, has taken a view that the gain arising on impugned purchase and sale of shares is nothing but a business activity and therefore taxable under the head business income . By doing so, the Revenue has sought to forfeit the concessional tax treatment available to the assessee where income is chargeable under the head capital gains . 9. The controversy, in essence, is in a narrow compass i.e. whether the impugned transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007, summarized the said principles for guidance of the field formations. 3. Disputes, however, continue to exist on the application of these principles to the facts of an individual case since the taxpayers find it difficult to prove the intention in acquiring such shares/securities. In this background, while recognizing that no universal principal in absolute terms can be laid down to decide the character of income from sale of shares and securities (i.e. whether the same is in the nature of capital gain or business income), CBDT realizing that major part of shares/securities transactions takes place in respect of the listed ones and with a view to reduce litigation and uncertainty in the matter, in partial modification to the aforesaid Circulars, further instructs that the Assessing Officers in holding whether the surplus generated from sale of listed shares or other securities would be treated as Capital Gain or Business Income, shall take into account the following a) Where the assessee itself, irrespective of the period of holding the listed shares and securities, opts to treat them as stock-in-trade, the income arising from transfer of such shares/securities wou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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